Vallejo exits bankruptcy paying more for pensions

Vallejo got court approval to exit from bankruptcy last week with a plan that includes a sharp increase in pension payments to CalPERS — the opposite of what many expected when the city declared bankruptcy in May 2008.

Unions feared that bankruptcy would be used to overturn labor contracts covering pay and pensions. Legislation to curb municipal bankruptcies by requiring approval from a labor-friendly state commission stalled last year, but is back this year in a new form.

CalPERS filed a motion in federal bankruptcy court in December 2008 arguing that if Vallejo labor contracts are overturned, separate city contracts with CalPERS for pensions and retiree health care would remain in force.

And as pension costs soared in a sinking economy in recent years, a few officials in Los Angeles, San Diego and other cities have talked about bankruptcy as a possible solution to unaffordable pensions promised current workers in better times.

But a Bank of America report reflects a new view: Vallejo’s experience may do more to dissuade than persuade other California cities that bankruptcy is an option for dealing with severe labor and financial problems.

“The city paid roughly $10 million in legal fees and wound up with no changes to it’s labor costs, which was the impetus for filing,” the Bank of America report said as quoted by CNBC.

The city with 120,000 residents, hit by the closure of the Mare Island Naval Shipyard in 1996 and then the housing boom and bust, has cut its general fund spending from $87 million in fiscal 2007-8, the year of the bankruptcy, to $66 million this year.

Bankruptcy was not needed for most of the spending reduction: deep staff cuts (sworn police from 155 to 90 and firefighters from 122 to 70 with three fire station closures) and deep cuts in spending on streets, building maintenance and other programs.

The city negotiated new labor contracts with four unions while in bankruptcy. In an early agreement that one council member called “insane,” the bankrupt city approved a new contract that gave police a 7 percent raise in July of last year.

U.S. Bankruptcy Judge Michael McManus in Sacramento,who signed off on the Vallejo exit plan Friday, made what some experts regard as a groundbreaking ruling in August 2009 after the electrical workers union held out.

The judge, exhausting the alternatives, overturned their contract.

Bankruptcy enabled Vallejo to delay and reduce some debt payments. Union Bank, after guaranteeing debt repayment to investors, was owed $50 million but will receive about 40 percent of the amount, the Wall Street Journalreported in May.

Bankruptcy also may have helped Vallejo begin negotiating cuts in health care costs for current and future retirees, dropping from full payment of insurance to a limit of $300 a month. The Journal said some retirees have been receiving about $1,500 a month.

When Vallejo filed a list of its 20 largest “unsecured claims” in May 2008, the top two spots were held by the California Public Employees Retirement System: $135 million for retiree health and $84 million for pensions.

Continuing to negotiate a reduction in the retiree health payment to $300 a month is expected to cut about $100 million from the general fund debt, according to a five-year Vallejobusiness planprepared for the bankruptcy court last fall.

For pensions, the new Vallejo labor contracts are similar to cost-cutting contracts bargained by cities not in bankruptcy.

The new Vallejo contracts raise the pension contributions of current employees and, with the exception of police, give lower pensions to new hires represented by firefighter, electrical worker and mid-manager unions.

Raising the employee contribution gives the city immediate savings, allowing a reduction of its contribution by a similar amount. Getting significant savings from lower pensions for new hires could take decades.

Why not lower the pensions promised current workers?

A series of court rulings are widely believed to mean that pensions promised current workers are protected by contract law, allowing cuts only if offset by something of equal value.

A local measure proposed by San Jose Mayor Chuck Reed and a statewide initiative discussed by a group led by Dan Pellissier would, if placed on the ballot and approved by voters, test whether pensions not yet earned by current workers can be cut.

Pension amounts earned for years already served would not be touched. But pension amounts earned after the ballot measures take effect would be reduced, producing immediate savings for government employers.

The Vallejo City Council chose not to use bankruptcy, and the power to overturn contracts, to test pension cuts for current workers. For example, the lower pensions given new hires could have been applied to pensions not yet earned by current workers.

Instead, Vallejo plans to pay CalPERS more than required to stabilize its five-year bankruptcy court plan, avoiding annual cuts in service and staff as CalPERS phases in rate increases expected to total more than 20 percent of pay in the next three to five years.

The city’s general fund payment to CalPERS, $7.9 million in fiscal 2009-10, is about $11.7 billion this year and planned to be $13.8 million in fiscal 2012-13 and $13.2 million in fiscal 2015-16.

“The city is challenged with significant and growing unfunded pension obligations due to CalPERS pension trust investment losses, demographic changes as employees live longer, and a 7.75 percent discount assumption that appears unsustainable,” said the five-year plan.

The city apparently agrees with critics who say that the CalPERS investment earnings forecast, 7.75 percent, is too optimistic. Actuaries advised dropping to 7.5 percent, but CalPERS in March left it at 7.75 percent, avoiding further rate increases.

Pension contributions for Vallejo police are 37.6 percent of pay from the city and 9 percent of pay from officers, according to a budget document. Firefighter pension contributions are 37.6 percent of pay from the city and 13.4 percent from firefighters.

The recommended budget for the current fiscal year expects the average police officer to cost the city $230,479 and the average firefighter $211,474, when total salary, pension, retiree health and other costs are included. (see table)

Vallejo city manager Phil Batchelor, told CNBC that a stabilized budget helped Vallejo avoid layoffs this year, unlike some neighboring cities. Replying to a question, he said the city at one point had asked for federal and state help.

“We made the necessary adjustments,” Batchelortold the cable television business channel. “We balanced our budget. We are not spending more than we are taking in. We are stable. We are sustainable. They are not. They can’t help us.”

The city council may ask Vallejo voters to approve a one-cent sales tax increase to restore some of the cuts and help rebuild the city.

From 2011-12 Vallejo recommended budget, part of p. J-30

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 8 Aug 11

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97 Responses to “Vallejo exits bankruptcy paying more for pensions”

Vallejo made a political decision to forego pension relief in its’ Chap 9. See the Central Falls,Ri. Chap. 9 filed last week,where the primary relief is to reduce pension payments to retirees and to reduce benefits for current workers for work already performed and for work to be performed. In that filing,there is no question that such relief is available under Chap. 9. Employee rights in a Chap. 9 are no different than employee rights in a Chap 11.
As to the comment that out of Chap. 9, benefits can’t be reduced without giving something of similar value,,as noted by Atty. Jeffery Chang,that was not a case “holding” but only an unecessary “dictum” . There is no case in Ca. recognizing a common law,non-enacted “vested right” to an unalterable pension grant to public workers.
Much of the cost of the Vallejo Chap 9 was from money that would have been paid to creditors but for the bankruptcy

“I think AB 155 is a bad idea. More important, I think organized labor has vastly overreacted to Vallejo’s bankruptcy filing. The fact is that few municipalities are likely to follow Vallejo into bankruptcy. Yes, everyone is talking about it and a few have even looked into it, but I doubt many will actually do it. Here’s why.

While newspapers have correctly reported that Vallejo’s public safety labor contracts (fire and police) tied the City to high wages, that’s really only half the story. If the contracts just provided for high salaries, Vallejo probably wouldn’t be in bankruptcy. This is because Vallejo could have just exercised its management right to lay-off firefighters and police officers if the total costs of the contract were more than the City could afford. In Vallejo’s case it couldn’t do that. (Vallejo also has binding interest arbitration—but that’s a post for another day . . .)

That’s what the newspapers have failed to properly report. Vallejo’s real problem was that its public safety contracts provided for high salaries and required minimum staffing levels. In the case of firefighters, the contract (as interpreted by an arbitrator) required that the City staff 28 firefighters at all times. To my knowledge there are only a handful of other agencies in the state with contracts that provide for minimum staffing levels. As an employer, having such a provision obviously ties your hands. After all, there are really only two components to an employer’s personnel costs: the cost per employee and the number of employees. As long as you control one of these variables, you can always reduce your personnel costs—either by reducing the cost per employee or reducing the workforce. In Vallejo, it couldn’t reduce its public safety costs because the contracts locked the City into high salaries and minimum staffing levels.

This unique situation is why I don’t think many other municipalities will file bankruptcy. Even if you’re a municipality with a labor contract that now seems unaffordable, you still have the ability to reduce your total costs by reducing your workforce. Granted, laying-off employees is not something any municipality wants to do, but at least it’s an option. It wasn’t an option for Vallejo.”

Something that is never mentioned in Vallejo Bankruptcy articles is that the city was able to regain regain “management rights” regards staffing, and a successful citizen ballot initiative led to the repeal of Binding Arbitration from the city’s charter.

john moore continues to misunderstand the differences between Vallejo’s participation in the California Public Employees Retirement System (CalPers) and the independent pension systems that have operated on a pay-go basis in both Prichard, Alabama and Central Falls, RI.

Let’s try one more time. Vallejo, unlike the other two, doesn’t operate its own pension system. CalPers is a creditor for Vallejo, so any work-out plan, as required by Chapter 9, would only restructure the debt Vallejo owes to the plan. It wouldn’t erase any of the pension obligations or payments already vested and owed.

Second, Chapter 9 prohibits violating any state laws or regulations in the work-out plan, making it a far different animal from other bankruptcy chapters. Since the California Constitution prohibits the discharge of public pension debts through bankruptcy, Chapter 9 provides no relief.

The very best you pension haters can hope for is that Jeff Chang’s opinion has some traction with the courts, and that there may be some possibility that future years of service may be computed at a lower multiplier for current employees. While Mr. Chang is correct that there is no case directly on point in this area, it would reflect such a departure from long standing practices that it is difficult to see how such an action would rate high on the potential for successful litigation.

Here’s his website and one of the articles he has written for your pleasure.

Skipping Dog: Your attempt to differentiate Calpers from other plans is dead wrong. In the Vallejo BK,the judge found that once a Chap 9 is filed,the city is “all in” and federal law trumps state law. This has nothing to do with “hate”,it has to do with the survival of cities. You should be better than “name-calling”

JM, CalPERS was an entity separate from Vallejo–not a part of, and managed by Vallejo, as is the case, in RI. Central Falls is bankrupt, and its pension plan with it. When Vallejo claimed bankruptcy, CalPERS was still solvent–and it will stay solvent, in perpetuity.

CalPERS is solvent because it continues to drain money from the state of California and the other government entities it provides pension services for. Those costs are escalating and will continue to escalate. When potholes aren’t fixed and police are let go, you can thank the pension cost.

A series of court rulings are widely believed to mean that pensions promised current workers are protected by contract law, allowing cuts only if offset by something of equal value.

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There is no such court ruling, and it is not “widely believed”.

“The employee does not obtain, prior to retirement, any absolute right to fixed or specific benefits, but only to a “substantial or reasonable pension.” (Wallace v. City of Fresno (1954) 42 Cal.2d 180, 183 [265 P.2d 884].) Moreover, the employee’s eligibility for benefits can, of course, be defeated “upon the occurrence of a condition subsequent.” (Kern, supra, at p. 853.) 864*864 (3) However, there is a strict limitation on the conditions which may modify the pension system in effect during employment. We have described the applicable principles as follows: ( “An employee’s vested contractual pension rights may be modified prior to retirement for the purpose of keeping a pension system flexible to permit adjustments in accord with changing conditions and at the same time maintain the integrity of the system. ( [Citations.] Such modifications must be reasonable, and it is for the courts to determine upon the facts of each case what constitutes a permissible change. To be sustained as reasonable, alterations of employees’ pension rights must bear some material relation to the theory of a pension system and its successful operation, and changes in a pension plan which result in disadvantage to employees should be accompanied by comparable new advantages.”

BAM! Cenral Falls RI will settle thsi issue once and for all.

The trough feeding piglets better prepay the rent on their trail park trash cans because pension haircuts are coming.

Let’s try one more time. Vallejo, unlike the other two, doesn’t operate its own pension system. CalPers is a creditor for Vallejo, so any work-out plan, as required by Chapter 9, would only restructure the debt Vallejo owes to the plan
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CalTURDS is NOT a creditor Skippy. Vallejo was NOT attepmting to strip pension rights for people retired or for years ALREADY WORKED.

Vallejo EASILY could have stripped ALL current employees of their current pension plans, including SB400-aka 3%@50. They would have a NEW pension plan moving forward. That has nothing to do with ‘creditor” rights.

Once again, Skippy proves he is the white belt of the law and legal analysis, has no idea of the financial issues and stil pretends to be a black belt. Too funny!

Second, Chapter 9 prohibits violating any state laws or regulations in the work-out plan, making it a far different animal from other bankruptcy chapters.
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OIh brother, you are dumber than a bag of rocks.

BK is part of the US Code, Title 11 to be specific, the supremacy clause of the US Constitution is clear, federal law is the supreme law of the land, it trumps ANY state law. These are muni’s, subject to Title 11, and as such the federal court’s have broad discretion and powers to do anything ti wants to-with certain exceptions that would conflict with the 11th Amendment-like forcing the raising of taxes or selling of property to satisfy a debt.

BAM! Double BAM BAM!!

Skippy, you must be hurting, because my hand is so sore from spanking you I can’t keep it up 🙂

Hey seesaw, can you link me to that CalTURDS website that has their current funding value-it should be under $200 billion as of rigth now…..BTW, that make CalTURDS projected value off by $150 billion, which is where CalTURDS would be today ($350 billion) if CalTURDS hit their 7.75% (LOL) discounted rate of return the last 12 years!!!!!

You don’t need a link to CalPERS, Rex. Its there for all to see. I expect it has lost a bundle, just like everyone else. I’m looking toward seeing the latest bottom line, myself. The saddest part: Things like this, make you, and your ilk, so happy.

(1) “CalPers is a creditor for Vallejo, so any work-out plan, as required by Chapter 9, would only restructure the debt Vallejo owes to the plan. It wouldn’t erase any of the pension obligations or payments already vested and owed.”

Although CalPers is a creditor for Vallejo, it seems to follow that IF a court were to disavow the city’s debt to CalPERS, then CalPERS could disavow it’s obligation to Plan participants.

Although CalPers is a creditor for Vallejo
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CalTurds is not a creditor to anyone. They are PAID in FULL every year based on what is requested of the members. That means everyone is current through the present year. Nothing owed. Previously retired employees are off the members roll and on CalTURDS rolls, present employees should be paid up to a present funding level, and furture employees and future years not yet worked are not owed because they have not been worked.

If CalTURDS loses money and needs more contributions (which is what is hapening right now) then there could be problems.

The pleasure you take in the stock market collapse that not only devalues PERS but also individual’s 401K and IRA savings really warms the heart.
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The stock market is a fraud, a bubble, just like tech was in the 90’s and housing was on the 2000’s, and like the dollar is today. It is reality. Don’t blame me for your mistakes of investing in equities when you should have been invetsing in treasury issues.
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It’s remarkable that anybody can be so twisted as to celebrate the current market conditions that are hurting public employees, ===============

Heck yes I am happy, I am throwing a party!!!!

These trough feeding piglet publc employeess have been destroying the poor and middle class-who make FAR LESS and have far fewer benefits and FAR LESS job security- with regressive taxes. WHY?? To fund their GED educated employees with $3-$10 million retire at age 50 pensions. Yes, I am happy, beyond belief that these greedy piglets are going down.

The sooner this house of cards falls apart the sooner the poor and middle class can get back on their feet- and stop being a slave to the fraudsters and scammers known as public employee unions.

Rex, if you would stop referring to CalPERS as “CalTurds”, your dog-brain might be better able, to understand, how it works. CalPERS is a creditor, to every entity that is a member of the Plan. Such members cannot just elect to stop being members, and be done with it. They must first pay, what they owe–probably millions.

It is more than likely tens of millions, or even hundreds of millions. How do you suppose cities can afford to opt out of that kind of debt? So if they can’t opt out they are stuck with the bad CalPERS policies, bad oversight, loose internal controls, risky investments, and unsustainable assumed rates of return that got them there in the first place. Looks to me like a death spiral.

The number was 236 Billion a week or so ago. And the 226.6 Billion doesn’t include today’s substantial market losses. Can’t you understand why people are so concerned? I think it was Richard Ryder who blogged that the markets have lost all of the gains made this year, and then some.

You may be correct that CalPERS will continue in perpetuity, but at what cost? As Kris Hunt wrote:

” CalPERS is solvent because it continues to drain money from the state of California and the other government entities it provides pension services for. Those costs are escalating and will continue to escalate. When potholes aren’t fixed and police are let go, you can thank the pension cost.”

You don’t have to look further than Vallejo to know that is true. They have significantly reduced both employees and services, and funding for road repair is at about 10% of what’s recommended (another deferred cost that will cost more down the road). But don’t worry; they’re making their escalating pension contributions.

Who says I don’t understand, and am not concerned? Of course, I am concerned! I reported the bottom line–I am just the messenger.

I do recall that CalPERS lost 100 billion between the time period, that I retired in Dec. 2007, and March of 2009. My 457 also lost $20,000. Both were on a road to recovery in the subsequent two years. I have faith–we will recover from this disaster, too.

The discussion about the BK jurisdiction over CalPERS is twisted. In Ri. the court will reduce retirees benefits and the benefits of city employees(to 40% for safety and about 20% for Misc.That will reduce the unfunded deficit owed by the city to the plan administrator/employees and thereby reduce rates. Central Falls has two plans,one like Calpers and one via an insurance co.. Benefits are being reduced the same for both plans. By the way,the one who insults the other the most, doesn’t win. This is a serious problem. As of last Wed.,Central Falls was 8.6% funded. My city is as of today,about 45% funded. That means the deficit will grow by 7.75% per annum,compounded,on the 55% deficit.In about 3-5 years,we will need to replace our police and fire depts. with contract service providers and volunteers.Not funny.

“Who says I don’t understand, and am not concerned? Of course, I am concerned! I reported the bottom line–I am just the messenger.”

SeeSaw,

Thank you for being concerned. Can you share your concerns with David Lowe? He isn’t concerned about anything other than justifying everything unsustainable. He seems to represent every union while coming off as a disingenuous incompetent. When addressing anything beyond union/CalPERS talking points he doesn’t seem versed on any of the issues, and certainly strains to provide any worthwhile response to legitimate questions.

I do consider your post from another Calpensions topic as a step in the right direction. You commented that pensions should be based on base salary only. I think that would be a good start in the right direction, even if I believe it is the wrong conversation.

Anyway, in your opinion, how do we at least get to the point where we only count base salary in the pension payout calculation?

I have seen David Low speak in person. He does what he is paid to do, and that is to lead the union that represents classified school workers–people who are among the lowest paid public workers in the CalPERS system. I have seen unions making concessions all over the place, so don’t think I would have anything to say to Mr. Low.

If I were concern-sharing, I would like to speak to all of the editorial writers, gathered in the same room, and tell them, “You did it–you succeeded in making outcasts out of the public sector”.

On the issue of base salary–I would assume that future legislation is the only thing that could occur, to require that base salary be the only number, to be used in pension calculation. I talked with a CAlPERS representative, when I discovered that a City, in SD County, includes its employees’ own pension contributions in the final benefit calculation. I was told that CalPERS is bound by the orders of that individual City. I had never heard of such, and I still believe it is wrong.

My own pension was caluclated strictly on my final full year’s base salary. I did have the option of converting one-half of my unused sick leave to length of service–not salary. (The increase on my pension would have been negligible.) If you are looking for egregious, pension spiking, you won’t find much at CalPERS. You need to look to the ACT 37 County Plans for that. Anyway, after all is said and done, there will always be the Court System, that will allow certain types of spiking, regardless of what the entity wants exluded, ie, uniform allowance.

To clarify my statement, about the City in SD County: The extra amount used for pension calculation, was the portion of the employee’s pension liability that was contributed to CalPERS, from the employee’s gross salary, after-pay-check.

Captain, a better reform, would be to require all public entities to limit the pensions of their top managers, to the highest amount allowed by CalPERS. The entity itself, must make up the difference, between what CalPERS allows, and the final pension amount, negotiated between the manager and the entity, which results of course, from the salary paid said manager. Public workers in this category, are not generally represented by unions. My former CM receives six times more in pension benefits, than I–I mention that, only to make a point. I have no animosity, toward my former CM.

(1) “TL: And the necessary conclusion is? That everyone who has a pension, should lose it?”

No, but because “total compensation” in the Public and Private Sector should be equal, the pensions of Civil Servants need to be substantially reduced.

(2) “In my opinion, the necessary conclusion should be, that these plans are made sustainable, by each respective entity, that is involved. ”

I don’t know what you mean by “that these plans are made sustainable, by each respective entity”, but somehow, I CERTAIN that you mean TAXPAYERS, not the workers themselves should make up for the substantial Plan shortfalls.

On the issue of base salary–I would assume that future legislation is the only thing that could occur, to require that base salary be the only number, to be used in pension calculation. I talked with a CAlPERS representative, when I discovered that a City, in SD County, includes its employees’ own pension contributions in the final benefit calculation.
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#1- it is a given that ONLY base salary should be pensionable salary, CalTURDS does not allow many of pension spiking gimmicks the numerous independant (1937) pesnion systems do-like San Ramon, where vacation pay, sick pay, holiday,pay was all included, as well as car allowance, uniform allowance and everything else under the sun.

#2- If the MUNI is paying the EMPLOYEE’s portion of the pension, a “pick up” then that “pick up” is ALL pensionable income. That is yet another scam. Walnut Creek CA does this with their PD and FD-they pay ALL of the GED educated cop and FF’s pension portion, while these two jobs receive $100K+ BASE salaries.

I think Richmond CA also does the employee “pick up” where the “base” salary of a GED richmond cop can exceed $161K per year -before any overtime is added in. Yes, you read that right, Richmond CA cops can get a base salary-with al the special pay- in excess of $161K per year. With their benefits the job is worth double that-$322K per year.

That is why every muni is broke-GED educated gov employees with $322K comp packages!!!!!…… while Harvard Law School grads-the BEST and brightest from the TOP LS in the country- only get paid $150K coming out-and that is while working 80 hours per week.

TL, this is a capitalistc sociey. If compensation between the public and private sectors were equal, budgets in the public sector would have to be increased by millions. You should stop trying to compare apples and oranges.

What I mean about working on sustainability: Each individual entity, that is invested in a particular pension plan. should sit down and look at the situation to see what must be done to be sustainable, whether it be catching up on its obligations, or increasing the contributions of the employees. That is where the CB process comes in. Of course, taxes are going to be involved. Doesn’t the grocer raise its price of a particular item, if it needs more to cover the overhead?

“If I were concern-sharing, I would like to speak to all of the editorial writers, gathered in the same room, and tell them, “You did it–you succeeded in making outcasts out of the public sector”.”

SeeSaw,

The editorial writers aren’t making stuff up for the sake of … I’ll repost here:

“You may be correct that CalPERS will continue in perpetuity, but at what cost? As Kris Hunt wrote:

” CalPERS is solvent because it continues to drain money from the state of California and the other government entities it provides pension services for. Those costs are escalating and will continue to escalate. When potholes aren’t fixed and police are let go, you can thank the pension cost.”

You don’t have to look further than Vallejo to know that is true. They have significantly reduced both employees and services, and funding for road repair is at about 10% of what’s recommended (another deferred cost that will cost more down the road). But don’t worry; they’re making their escalating pension contributions.”

I’ll agree that Act 37 plans are abused to no end, just ask Kris Hunt who is president of the Contra Costa Tax payers Association. The way there pension system is managed should be criminal – and so should San Jose’s, Mendocino County’s, Sonoma County’s, LA, SF, San Diego, etc… but that doesn’t mean CalPERS plan members aren’t also gaming the system because they are, albeit more sutely – but it is happening as we speek. Instead of citing issues with specific plans I’ll just comment on CalPERS itself.

Out of time … but I’ll get to that later. SeeSaw, you seem like a good person. If you think pensions should be based solely on base pay, and I’m not so sure we’re using the definition of base pay, as a retiree that potentially has much to lose why aren’t you and others retirees more vocal? Why aren’t you asking Calpers to make corrections?

The discussion about the BK jurisdiction over CalPERS is twisted. In Ri. the court will reduce retirees benefits and the benefits of city employees(to 40% for safety and about 20% for Misc.That will reduce the unfunded deficit owed by the city to the plan administrator/employees and thereby reduce rates.
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The so called “publis safety” pensions are by FAR the biggest pension problems, and by FAR the most costly, some in CA costing as much as $10 million (that was for just for ONE firewhiner).

There is no way a federal judge would take away 80% of general fund pensions that are far less costly than public safety while only taking away 60% from public safety.

The cuts in Central Falls will be PROGESSIVE, the bigger pensions will be cut the most, the less costly pensions the least-I have already read the plan online and that is what is being asked for by the CF RI trustee

I’m already retired Rex. I am free to support my former colleagues, current retirees, and future public employees. That’s what I do. You can take CB away, and you will be irked to find out that it won’t make that much difference to you, personally. How much CB do you think those six figure, retired managers had? Oh doggie, you are so nieve.

TL, this is a capitalistc sociey. If compensation between the public and private sectors were equal, budgets in the public sector would have to be increased by millions
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Seesaw, how many times do I have to spank the truth into you after you post this whoipper lie?????

Gov pays FAR MORE than the private sector does, in 80% of it’s jobs. FACT.

When GED educated cops and firewhiners are comping MORE than Harvard Law School grads, doctors, CPA’s and any other professional then there is a serious problem!!!!!!!

Captain, I believe that pensions should be figured on the base salary amount only–that is the amount of money that the employee is paid per hour, per 40 hr. week. I would never advocate taking something away from someone, who is already receiving it or contracted to receive such, according to the rules, legally in place. As a citizen, I will use my vote, according to my beliefs, on whatever issues are put forth. As I told you in my previous post, I did call CalPERS about the example, that I consider egregious. I was told that it was the call of the respective City–CalPERS just follows their orders. I am not a person that is going to take a placard, and march in the street.

TL, I am not a greedy individual, and I do not agree with your assessment, about who is paying for my pension. Right now, 64 cents of every dollar I receive, comes out of the investment earnings of CalPERS. The other 36 cents is coming from the contributions that were made by my employer and me, during my working years. I don’t consider any of that money yours, because I earned it. In the meantime, in addition to the salary I received when working, I was paying my share of taxes and I pay my share of taxes on my pension earnings, now. Paying taxes is the price we all pay, for living in the type of society, in which we live.

Captain, there is that thing that is referred to as, “Spin”. The editorial writers have used, “Spin”, advantageously, to cause a private sector backlash, against public sector employees. Its called, “Divide and Conquer”.

“Captain, I believe that pensions should be figured on the base salary amount only–that is the amount of money that the employee is paid per hour, per 40 hr. week. I would never advocate taking something away from someone, who is already receiving it or contracted to receive such, according to the rules, legally in place.”

Then we do not have anything to discuss on this issue. Base wages are one number; wages that include educational pay, pay for certificates, include unused holiday pay, shift differential, unionform allowance, management incentive bonuses, etc… computes to a very different number.

As a retiree I assume you receive paid medical benefits. Those benefits are NOT a vested right. Look at this very article and you will see what Vallejo has done with their retiree medical. Something WILL give at some point and retiree medical is probably the first thing to go. In both Vallejo & RI, the unions don’t represent the retirees. If you consider that you will start to understand why taxpayers are so concerned.

“Captain, there is that thing that is referred to as, “Spin”. The editorial writers have used, “Spin”, advantageously, to cause a private sector backlash, against public sector employees. Its called, “Divide and Conquer”.”

SeeSaw,

You defend David Lowe (Dave Low-Ball Lowe in my book) and then you say he’s just doing what he’s paid to do. That doesn’t mean he’s not disingenuous, lying, or otherwise. He certainly isn’t the least bit honest. And he has represented just about every union in California either directly or indirectly, including CalPERS.

If your argument is that “he’s just doing his job” that’s fine. But who’s he doing the job for? I can’t think of an organization, or union, that doesn’t have access to top notch PR firms yet this guy is their spokesperson? It doesn’t make sense to me. Most of what comes from his grinning mouth is easy to disprove. As I’ve stated before, he doesn’t seem all that knowledgeable beyond the talking points. In other words – he’s nothing but spin.

And then if you look at the “CalPERS Responds” website how do you take it seriously. Whomever wrote that nonsense is completely out of touch – more spin. I’m not going to go back and find the link right now but one of my favorites, in their fact & fiction section, goes like this:

Fiction: Calpers members don’t contribute toward their pensions

Fact: all Calpers members contribute toward their pension (5-9%)

I’m guessing there are several hundred to a thousand plans that can prove that’s a blatant lie!

Just because David Lowe & CalPERS aren’t very good at spinning doesn’t mean they aren’t doing it. They’ve actually taken the low road of flat out misrepresenting the facts or completely lying.

Captain, I must use Medicare, as my primary medical insurer, because I am over 65, and my ABC, PPO, Medical Premium, which acts only as secondary to Medicare, is $800+/mo. I receive a capped stipend of $532, from my employer, toward my ABC premium. My spouse and I spend $16,900+/yr., out of pocket ,for group, medical insurance. Adding in my employer’s stipend totals our yearly medical insurance premiums to a cost of $22,000+/yr. I am aware that the medical stipend, paid by my former employer, could be an issue, in the future. The medical stipend has nothing to do with my CalPERS pension.

I don’t agree with all of those things you mention being included as salary, in the pension calculations, but the only thing that can be done is changing the structures in the future, like the second and third tiers, that are already being used in many agencies. I continue to believe that the majority of those spiking issues are with the County plans.

I think the member contribution statement, by CalPERS, is a matter of semantics. The employee does contribute, whether or not it is a benefit, in addition to base salary, or if it is paid by the employee out of such. I did both during my tenure. I paid 7% of my gross income, for the first half of my tenure, and the employer picked it all up during the last half. The employees, at my former entity, are now paying 8% out of their respective gross, base salary. So I don’t see how the CalPERS statement can be considered a blatant lie.

Captain, there is that thing that is referred to as, “Spin”. The editorial writers have used, “Spin”, advantageously, to cause a private sector backlash, against public sector employees. Its called, “Divide and Conquer”.

No seesaw, the only “spin” is from the piglet trough feeders, YOU and your piggy buddies are the ones trying to “Divide and Conquer”, by tryiing to RIP off the poor and middle class so you can “retire” at age 50 with million dollar pensions.

No, your “spin” days are over, the jig is up, your gravy train ride has ended…

TL, I am not a greedy individual, and I do not agree with your assessment, about who is paying for my pension. Right now, 64 cents of every dollar I receive, comes out of the investment earnings of CalPERS
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And 95% of the CalTURDS funds that earn income come from the taxpayers.!!

I cannot agree with or refute that number, Rex. We get services. We pay taxes. The people who provide the services work and get paid from the taxes. If you don’t like the system, move to another state, or another country.

Captain, I cannot find any information showing that David Low has ever been the leader of any union in CA except the one he leads now–the CA School Employees Assoc. And, I have never seen any information to show that he has ever been connected with CalPERS. His union members belong to CalPERS. These are school secretaries, clerks, teacher aids, cafeteria workers, custodians, etc. What lies could he tell about that group?

My gravy train has ended? Really, Rex? My CalPERS check lands in my bank account, on the first day of every month. That’s all the gravy train I need. Is this really all you have to do with your time, Rex? You poor dog. Somebody should walk you, once in a while.

You say you’re concerned. You said that pensions should be based on base pay but you’ve retreted from that position. You don’t seem concerned about retiree healthcare being eliminated because it doesn’t really impact you. You think David Lowe only represents the lowest paid employees.

What is it that you are concerned about? I’m trying to understand, even thought we shared common ground, but it isn’t real. What is it that you are concerned about? Is it only your pension – with all the perks? I initially thought your concern was in regard to both fairness and the welfare of California. But the only solution you’ve provided – pensions based on base pay, doesn’t seem to be an option for you. Why is that?

I did not retreat from my position. I am saying that the pensions that exist now cannot be changed according to the rules, and the only thing that can be done is to make sure spiking is not allowed in the future. (Please, it is Low–not Lowe). I live in this country–I am concerned about everyone–is that not ok with you? My pension with all the perks? What the heck are you talking about? I have one pension–calculated on base salary only. I don’t connect the medical stipend with my pension–it is very tiny, compared with what I pay out-of-pocket for medical insurance. I have lived in CA for 55 years. It is my state. I care about the welfare of my state. I want everyone to have a job. There is nothing about my pension, that is unfair to you or anyone else. CA and the US are my concerns–I am a citizen of these places. I said before, I am not one to take a placard and stand in the street. We have a Board to run CalPERS. The Board decides what to do. I cast my votes for the Board members. If you have concerns about the way CalPERS is run, go to the Board meetings.

I am saying that the pensions that exist now cannot be changed according to the rules,
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Pension formulas for current workers can be changed at anytime after the current contract ends. They are not locked in stone at any formula except fo the CURRENT contract.

Take it to court, that’s all any muni had to do. Take it to court and watch what happens.

Pensions are irrelevant. The nation is indebted to the point of gridlock. The governments will shut down entirely at some point. I believe BofA will go bankrupt as well as other banks. Serves the banks and the government right for their gross corruption and greed.

Vallejo’s ‘hired gun’ Sandy Salerno was out to get rid of paid medical for IBEW retirees from the minute she started working for the City. She offered a contract to IBEW which would have allowed the City to lay off as many IBEW employees as they want and replace them with contract labor (There was no equivalent demand made to any other bargaining unit). She knew that the union couldn’t accept that and as a result the contract would be thown out. Once it was, the City Council told IBEW they had to find 3 million in cuts, much of that to pay for the 7.5% pay raise given earlier in the year to police officers. IBEW did what they had to do, and threw their retirees under the bus..after all IBEW is not mandated to represent them.

Cops got pay raises, CAMP got a sweet contract, exempt didn’t suffer and while Fire did take cuts they are nothing compared to IBEW; IAFF retirees who retired before 3% at 50 receive 75% of the Kaiperm medical cost, not $300 as ALL IBEW retirees did. So Vallejo should be very proud..they have saddled the most vulnerable retirees, many of whom are getting pensions of 20-30k a year with a health insurance bill of $4,000 and $10,000 a year.

But, as they say payback’s a bitch.. the City now is unable to fill critical IBEW positions such as dispatcher and water treatment operator, my guess is that the people who have the requisite skills to apply for those jobs have decided to stay where they are rather than go to work for Vallejo and wait for the City to come after IBEW again (and there is no doubt that they will..it’s just a matter of when)

“I did not retreat from my position. I am saying that the pensions that exist now cannot be changed according to the rules, and the only thing that can be done is to make sure spiking is not allowed in the future.”

SeeSaw,

I don’t agree with most things you say but i do appreciate that you are a stand-up guy in the face of less than friendly fire. And…it is Low, not Lowe. Does’t change my opinion of the man but the incorrect spelling was in error.

Eliminating pension spiking wont solve anything. The problem is well beyond tickling the edges of abuse. The problem, at this point, is so structural there is little foundation left to support the massive debt, or the flawed policies that are supported by the union dominated BOD. And the make-up of the CalPERS board is a big part of the problem.

Just my opinion.

Tomorrow there is a webinar regarding the proposed (New) GASB pension accounting rules. It should be interesting. Hope you’re watching with me. Here is the info:

One more reminder … Wednesday from 10AM to 11AM the Chair of the Governmental Accounting Standards Board (GASB) and GASB’s Executive Director will give a Webinar titled “An Overview of the GASB’s New Pension Proposals”.

But, as they say payback’s a bitch.. the City now is unable to fill critical IBEW positions such as dispatcher and water treatment operator, my guess is that the people who have the requisite skills to apply for those jobs have decided to stay where they are rather than go to work for Vallejo and wait for the City to come after IBEW again (and there is no doubt that they will..it’s just a matter of when)

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OK, let me start by saying I agree with your comments about the cops and firewhiners 100%, they took NO major hits, yet they were the main cause of the deficit.
Some of the things-liek the 7% raise for cops and INDEMNIFYING them for lawyer fees in any future litigation was obviously a scam, a fraud b/c NO ONE in the resl world would ever, in a million years, do a deal liek that. It made no sense whatsoever except for kickbacks.

Having said that, the “requisite skills” for a dispatcher is a GED or HS diploma, much like cop and firewhiner. There would be applications out the wazooo if these positions were put up for bid at HALF the current pay-and that also goes for the VPD and FD.

My local water dept had a 20 hour per week job open up last year, did have gov bene’s. Guess how many people applied???????? 520. YES, you read that right-520 applicatiosn for a part time water district job-which ultimately went to an insider, who was connected it-like virtually all decent gov jobs.

Alright, why does my last post say: “Your comment is awaiting moderation.” Nobody else has that line attatched to a comment. I try to be fair. If I’ve offended someone just let me know. If my posts aren’t appreciated I won’t post.

Captain, I don’t think it is one individual holding back your particular remarks–I think there are key words, that trip something in the IT moderating program. If you reword, it will probably go through. When I get that message, the post usually shows the next day.

I had a post refused last week on another blog–the, “moderator”, said that I was using profanity. I read it over, and there was not one ounce of profanity in it. I reworded, and it went through.

Kwobi, my former association has been asked to vote on whether or not to continue my medical stipend. (I receive $532/mo., and still pay $16,000 yr/, out of pocket for medical insurance premiums for me and my spouse.) It was presented to them in the CB process, two years ago, and they refused to vote on the matter, taking the position that they should not be voting on something that affected workers who were no longer there.

Captain, I think that when that line is attached to your comment, you are the only one seeing that line, and your comment. I frequently get that line on the OCR blogs, and I have believed that I am the only one seeing the comment and the moderation message, until the moderation line is removed by the moderator. Somebody–am I right, or am I wrong?

Captain, I think the new GASB standards will serve no purpose other than to continue to inflame the private sector against public sector workers, because they have DB pensions. The pensions are set up by actuaries, who are supposed to be educated and certified to determine what it takes to make them sustainable. The public employees had every right to put their faith in their employers and in the people who set up the Plans. I won’t be home tomorrow, but I’m sure that the transcripts will be published widely.

@SeeSaw I guess I should have clarified, I was referring to unfilled journey level positions. Using police/fire dispatcher as an example, it takes about 18 months of on the job training to fully train one. Since Vallejo dispatch is already dangerously understaffed, they have put themselves in a position where they can’t hire anything but trained dispatchers from other agencies, they don’t have available staff to train inexperienced communication operators. And experienced dispatchers from other agencies are not anxious to work in Vallejo even if it means a pay raise, they fully expect the City to go after IBEW again when they are broke again (which won’t take long at all)

Unlike your assocation, IBEW was quick to throw their retirees under the bus, I am not sure how much I can blame them, there was no way they could have cut 3 million dollars without doing so. My issue is that it was rather machivellian for the City to single out IBEW retirees and set it up in a way that they could then claim that it was not them, it was current IBEW leadership who screwed the retirees. .

@Captain I don’t think GASB changes will impact anything in Vallejo, their accounting staff has always played fast and loose with accounting rules and I see nothing that will change that in the future, GASB 45 was implemented in 2004 and Vallejo first reported their unfunded retiree healthcare liability when? FIVE years later, after they filed bankruptcy.

Kwobi, my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula. All of the public entities and their employees just need to keep their chins on the grindstone. There is no other alternative in these times. Its up to the private sector now, to get the job market moving again.

Kwobi, my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula.
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Wow, that has to be the whopper of the century seesaw-even YOU have never told oen this big..

Sizzler opened as new restaurant in OC last week and they had 2,000 applications, for 100 jobs, jobs that have NO BENEFITS-and you claim a city clerk job cannto be filled, when the CA U-6 une,ployment rate is 22%, and has been 22% for the last 28 months-man you must have a screw or two loose if you think anyone is buying that whopper lie.

seesaw, you are such a story teller, really, no one believes a word of that whopper lie that they cannot get a city clerk job filled because of a 2nd tier pensions.

This is why you’re going down, everyone knows the public employees tell whopper lies to line their greedy little pockets.

Well, Rex, that is the case. The job is not a trainee position. A job at Sizzler calls for less cranium skills, than that of a City Clerk.

I have every respect, however, for restaurant workers–they are very under-rated for the physical work that they must perform, besides, putting up with the public, every moment of their shift.

I don’t lie, Rex–ever. Even if I were that type of person, I am not in a position, to have to pull anything, to protect my own situation. I have a good, stable pension, and don’t have to do this back and forth with you, or any other posters. I do it, because I support the public sector.

Well, Rex, that is the case. The job is not a trainee position. A job at Sizzler calls for less cranium skills, than that of a City Clerk.
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Working at Sizzler requries more brain power than ANY gov trough feeding job seesaw, there is NO bottom line to uphold in a gov job-you can fail all day long and it doesn’t matter b/c the taxpayers bail you out.

Anyone with common sense could be a city manager-or GED cop, or GED firewhiner or any other gov job.

“Kwobi, my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula”

when the CA U-6 unemployment rate has been at 22% the last 28 months. The claim that a lower pension would prevent good, bright, qualified applicants from applying for a trough feeder job with bullet proof job security when we ar at 22% UE is a JOKE!

I told you before-my local water district had a job opening for a part itme-20 hour per week job and they received 520 applications.

Your comemnt that no one applied b/c of a lower pension was ridiculous.

Rex, to repeat: The job is not for a trainee. The water district, part-time job, like the restaurant jobs, do not have the same requirements. How many of those respective applicants do you think had experience in conducting elections? I don’t care whether you accept, that my comments are true, or not. I am the one who knows–you are the one who insults–standard for you.

“Kwobi, my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula.”

That is an interesting statement SeeSaw. Are you saying that employees that switch cities are subject to retirement benefits of new employees? I don’t know the answer so I’m curious.

As far as your main point is concerned I’ve often wondered if city HR employees even know how to recruit. In my opinion they consider recruitment the act of taking a candidate from the classification of applicant to employee – recruitment city government style.

“my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula”

– I consider that statement very disturbing. I also consider that often repeated argument unfortunate, unprofessional, disingenuous, unimaginative and insulting. I’ve been fair with you and appreciate your comments and contributions so I hope I don’t lose you now. But….

Compensation isn’t just pensions. If it were nobody that needed cash flow would ever accept a government job. The notion that pensions are driving the force behind “overqualified” employees accepting a government job is beyond ridiculous. People accept jobs because they can -they were offered, and they like the pay/compensation.

If your city has trouble recruiting looks to see if the recruiter/HR is doing their job. They get paid well. If that isn’t the issue compensation can be increased. If the pension was decreased that cost savings could be used to increase salary, or provide a onetime sign-on bonus. The good news for taxpayers is that the increased cost of compensation, as long is it doesn’t increase the cost beyond the savings of the reduced pension, doesn’t increase when CalPERS investments decline, creating an additional unfunded liability. Of course this strategy should only be used in limited cases when positions are hard to fill.

I guess the best approach is first to reduce the pensions of all these positions to realistic levels, Second, make sure these positions are advertised to all potential job seekers – as opposed to just internal job seekers or career government employees – it is really a closed job market. Third, is it really even a full time job (I don’t know) or can the city do what Santa Clara has done with their fire chief position (they love the arrangement) and hire the former (chief) retiree on a part time basis working 20 hours per week with no pension benefits.

If we were to just completely monetize salary, all the paid leave including 14 paid holidays, include overtime that is only paid to six figure earners in the public sector, add in the cost of the pensions, include cost of cadillac health plans, add the the unfunded cost of retiree medical benefits for life, and say this is the dollar we will pay you….it would look like the line of applicants for a FD opening.

I’m tired of hearing about how government positions are the only ones that can’t be filled. That’s an insult to common sense and millions of unemployed people everywhere!

Captain, these are not normal times. In this era, of shaky economic conditions, active public employees are not moving around, looking for better opportunities,as much as they did, when conditions were, “normal”. (If a public employee works for multiple agencies during their tenure, all of the respective service credits and formulas that covered each employing entity, are used to calculate the retirement.) Many public employees, who have been at their jobs for years, are staying put, right now. In most cases, a new hire must go through a one-year probationary period. Its not hard to see why someone who has permanent status, where they are, might be reluctant to take a chance, that it might not work out. And yes, if the pension formula is lower, than what they have currently, it could be an issue. I was told by former, still active colleagues, that the new pension tier was a factor, in recruiting for this particular position. Yes, I can believe that–knowing what the employees have been going through, at all these municipalities, the past three years. Yes, it is a full-time job, and yes, the former incumbent is working part-time, assisting current staff, in the interim. I know that they follow proper procedures when they recruit. It will be filled, eventually.

Further on the subject: Rex, if you will look at my first post, on this now, worn-out subject, I did not say that no one applied. I have no knowledge of how many applied. I said that they had trouble with the recruiting, because of the second-tier pension formula. Bottom line–the recruitment process has not closed, with the position being filled–yet.

Rex, to repeat: The job is not for a trainee. The water district, part-time job, like the restaurant jobs, do not have the same requirements
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LOL…your public employee mentality is shameful!

Yes, I am sure because it has some MINOR skill sets required there is NO ONE in CA who can do a public piglet job like City Clerk.

You’re correct, as in the minimum skill set for this job you mentioned, a GED or an IQ of 15, and the number of applications might drop from 520 to 519.

Earht to seesaw, City Clerk is a joke job that anyone with a HS diploma could do. It reuqires NO COLLEGE degree and is NOT aprofession, it is your basic, typical run of the mill gov trough feeder job. My pet turtle could do it if given the opportunity.

You kill me seesaw, you really do. You sound like the typical GED educated cop/firehwiner who claim they need to offer $200K comp packages to GED employees is because they need to get the “best and brightest” …….well, all I can say is……..Bwhahahahahhahahah.

“my former agency had trouble recruiting for a City Clerk’s position, due to the recent enactment of a second tier, pension formula”

– I consider that statement very disturbing. I also consider that often repeated argument unfortunate, unprofessional, disingenuous, unimaginative and insulting. I’ve been fair with you and appreciate your comments and contributions so I hope I don’t lose you now.
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Cap-seesaw has never had a job in the real world before- she is forced to repeat whatever her “public union handlers” force her to repeat 🙂

Rex, I worked in the private sector too, before I was in the public sector. I am not in a union and have no “handlers”. No one at my former work place is involved in any way with unions, except once a year, when they meet to vote on the latest, proposed MOU. I had supervisors who worked for my agency, not for the union. I was in the public sector for 40 years, and if I have anything to say, it is from my own experience and observations, in that sector. Other than that, I am married to someone who was a blue collar worker. in the private sector, for 50 years. My children and other friends and relatives are all in the private sector. I have just as much knowledge of the working world as you–so don’t give me anymore of your, “real world”, crap. Just shut up, doggie, and go lay down.

Wopw Rexpoodle— after all of your losses on these troll boards you post on one might think you and Duncey and OCoddball would learn SOMEthing! The law, common sense, pol. will and reality have once again conspired against you…sad for you sweet troll.